How To Find Tax Rate In Excel Method 1 Apply Excel VLOOKUP Function to Calculate Income Tax In this method we ll apply the VLOOKUP function This function looks for a value in a range and returns a value from the specified column The tax rate here is not like the earlier sample So follow the steps below to perform the task Steps Select cell D13 Type the formula
In the following picture we have a dataset of four columns The first column is Bracket This column has two sub columns Lower Bound and Upper Bound We have put some sample tax brackets ranging from 0 to 60 001 and above The next column is Tax Rate which has all the marginal tax rates ranging from 0 to 50 The next two columns are Taxable Income and Tax Payable To calculate the total income tax owed in a progressive tax system with multiple tax brackets you can use a simple elegant approach that leverages Excel s new dynamic array engine In the worksheet shown the main challenge is to split the income in cell I6 into the correct tax brackets This is done with a single formula like this in cell E7 LET income I6 upper C7 C13 lower DROP VSTACK
How To Find Tax Rate In Excel
How To Find Tax Rate In Excel
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To automatically calculate the tax on an income execute the following steps 1 On the second sheet create the named range Rates 2 When you set the fourth argument of the VLOOKUP function to TRUE the VLOOKUP function returns an exact match or if not found it returns the largest value smaller than lookup value A2 If it does and the income is at least 9 951 then I can multiply that by the tax rate of 10 as that would be the maximum that can be taxed at the first bracket 9 951 x 10 If the income is not at least 9 951 then I just multiply the total income by the tax rate Here is what the formula looks like using named ranges
Before we get ahead of ourselves let s be clear about our objective We want to store a tax table in Excel We want to enter a taxable income and have Excel compute the tax amount the marginal tax rate and the effective tax rate This idea is illustrated in the screenshot below Since this is Excel there are many ways to achieve the goal For example if the tax rate is 10 you should enter it as 0 10 This allows Excel to correctly interpret the tax rate for calculations Step 5 Calculate the Tax In the third column label it Tax Amount and use the formula A2 B2 for the first row under this column This formula multiplies the income by the tax rate to give you the tax
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Because most of the salaries are unique values we need to find the closest value in a tax rate table to calculate Basic Tax Rate The VLOOKUP has 4 arguments Value we search Range of cells we search for the value Mastering the art of calculating tax rates in Excel becomes remarkably more accessible with the strategic use of VLOOKUP By If you don t need a table structure you can use the formulas below with Federal Tax Rates of 2017 to find the total tax All you need to do is to copy the formula and paste it your Excel worksheet anywhere except cell B1 And enter your income into B1 Single
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